What’s the purpose of a shared family purpose?

“To whom much is given, much will be required.” This precept dates back to biblical times yet remains just as relevant as ever among multigenerational family firms. By distributing their wealth toward specific social causes and concerns – often unrelated to their core business – high-net-worth families can serve as powerful agents of change.

On a more personal level, many also worry about the potentially detrimental impact of their wealth on future generations, especially how if might affect their psychological and social welfare. Not surprisingly, questions like “What’s the purpose of it all?” and “What’s it all for?” emerge recurrently in IESE’s gatherings of family-owned business leaders (FOB).

For members of family firms – particularly those from later generations of successful family dynasties – these reflections highlight the need for a shared family purpose beyond the standard “being a good business owner.” But what do we actually mean by “purpose”?

The issue is up for debate since at present, there is no clear definition among global scholars and family-business advisors. Needless to say, this lack of consensus has methodological repercussions on how they study the development of FOB purposes.

But what do we actually mean by “purpose”? The issue is up for debate, since at present, there is no clear definition among global scholars and family-business advisors.

By extension, the same can be said of “family purpose.” In exploratory surveys, external advisors often ask family members about the purpose of their family wealth and subsequently use these responses to generate empirically-based conclusions. This purely data-driven approach presents limitations, however, as the concept of “family purpose” is left to the family to define. In other words, it can be whatever they deem it to be.

Following this approach, families run the risk of overlooking a fundamental antecedent of successful multigenerational family leadership: a shared family purpose that guides and unites family members’ decision-making processes and ability to promote the common good.

Families grounded on a shared family purpose are also empowered to share the ownership and leadership of their enterprises collectively. In this way, intergenerational perspectives and transitions become firmly interweaved in the family’s self-understanding and approach regarding their roles and responsibilities.

With the generous support of the Sir John Templeton Foundation, my colleague Tarek el Sehity and I, together with Kendall Bronk, Anne Colby and William Damon, hope to offer greater conceptual clarity on the issues of shared purpose and shared family purpose. To this end, we will work in tandem with developmental psychologists to research more than 40 European and North American entrepreneurial families via in-depth interviews.

Through these efforts, we hope to advance the understanding of the role of shared purpose in their joint endeavors, as well as generate new insights on how family enterprises can develop and transmit a shared family purpose that harnesses wealth for the common good.

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